Lytton in the spotlight

An aggressive foray into diamond exploration in Canada’s North is providing a new focus for Lytton Minerals (TSE), which earlier this year was a semi-dormant junior with a stock price below a dime.

The company was active several years ago when it backed the efforts of Tagish Resources to overstake and claim title to the Eskay Creek deposit north of Stewart, B.C. The venture paid off for Lytton, which helped Tagish and others collect the equivalent of $3 million from International Corona in an out-of-court settlement.

Lytton now has 100% control of about 1.1 million acres near the Point Lake diamond discovery of Dia Met Minerals and BHP Minerals, although a small portion is optioned to another party. The land package was acquired when Lytton merged with a private company, Benachee Resources, which staked the land package.

In late October, Lytton’s share price more than doubled in heavy trading after the company had reported that samples from its property returned “substantial amounts of chrome diopsides” as well as “a profusion of what, in the opinion of Dr. Raymond Davies (Lytton’s vice-president) are pyrope garnets.” Both are indicator minerals for kimberlite pipes, which can in turn host diamonds.

The 30-lb. samples, 800 in all, were gathered and analyzed by Canamera Geological, controlled by John Dupuis, a shareholder of Lytton who was also involved in the Eskay Creek overstaking.

This news came as a surprise to the Vancouver mining community, as the firm was not previously known to have either a laboratory or expertise in this area. Suggestions of conflict-of-interest were then raised by The Vancouver Sun business reporter David Baines, who also revealed Dupuis’ 1979 conviction on a drug-trafficking conspiracy charge.

Lytton President Desmond Alexander (a former director of both Breakwater Resources and American Pacific Mining) dismissed Baines’ suggestion, and said he missed the “real story” — that of a Canadian junior “keeping the Canadian flag flying in the North” and not dealing its properties to a foreign major. And he said Canamera’s laboratory work is being guided by Davies, a former senior officer of Monopros, as well as other diamond experts, and will be followed up by independent microprobe analyses.

“We are anxious to avoid saying anything misleading or controversial,” Alexander said.

Lytton also has the backing of some heavyweights in investment circles, including Timothy Hoare of Credit Lyonnais Laing, a former director of Breakwater who recently co-authored a report on diamond exploration in the Lac de Gras region subtitled “These Diamonds Will Still Be An Investor’s Best Friend.” Other high-profile Lytton shareholders or backers with international connections include Harry Dobson (American Pacific Mining) and Fred Christensen.